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​Remarks by Acting Secretary Neal Wolin before the Chicago Council on Global Affairs

2/25/2013

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As prepared for delivery

WASHINGTON - It is great to
be here with you all to discuss the important decisions we face as a nation and
to talk about the President’s proposals to strengthen the middle class,
increase the momentum of the recovery, and speed the pace of job creation.

Let me start by saying a few words about current
economic conditions.

The
economy is in better shape today than it was four years ago when the President
came into office, and while we still have a lot of work to do, the economy is
moving in the right direction.

Since its trough in the summer of 2009, the U.S.
economy has not only made up for the lost output during the recession, total
growth over this period has taken real GDP nearly 7½ percent above its low
point during the recession.

Over
the last 35 months, the private sector has added 6.1 million jobs, and since
job growth resumed, we’ve seen the creation of almost 500,000 manufacturing
jobs. That’s the strongest growth in manufacturing
jobs since the mid-1990s.

The economic recovery has been driven by the
private sector. The balance sheets of
businesses are robust. Productivity is
stronger than it was before the crisis.
American companies like Apple and Caterpillar are starting to move
operations back to the United States.
And we are buying more American cars today than we have in five years.

What had been a significant drag on the economy—the
housing market—is now steadily improving.
The positive signs are real: historically low mortgage rates, a near
record level of housing affordability, improving builder confidence, a
declining inventory of homes for sale, and an uptick in housing prices.

And we are building a stronger foundation for the
future: Americans are saving more than before the crisis, our budget deficit
has started to decline as a share of the economy, and we are borrowing less
from the rest of the world. Relative to
GDP, our current account deficit is now half the level it was before the
crisis.

So
we’re making progress. Let’s not forget,
four years ago, America was deep in crisis.
Our economy was contracting at a 5.3 percent annual rate. In the month the President was sworn in, we
lost 794,000 jobs. The improvements we
see today are a result of the actions taken by the President—along with
Congress, the Federal Reserve, and the previous administration—to put out the
fires of the financial crisis, rescue the auto industry, and restart economic
growth.

Looking
ahead, we have good reason to expect that progress will continue. Economists and business leaders anticipate further
growth and further job creation. But the
ongoing brinksmanship in Washington over how to bring down the deficit should
give us pause. As the President
explained in his State of the Union address, Washington’s been going from one
manufactured crisis to the next, and it has damaged consumer confidence and
affected business decisions.

And
as I’m sure everyone here will agree: These political stand-offs must come to
an end.

Now,
of course, our economy is going to be tested.
Shocks are bound to come. In the
last year, for instance, threats to the economy included a jump in energy
prices, a severe drought during the summer, Superstorm Sandy, and the sovereign
debt crisis in Europe.

But
what we cannot do—what would be a grave and unnecessary mistake—is to deliberately
throw sand in the gears of our recovery.

Right
now, deep, indiscriminate spending cuts—known in Washington as “the sequester”—are
set to take place on Friday. We’re
talking about cuts to education, nutrition assistance, and support for small
businesses. Just think, 10,000 teacher
jobs could be lost. Six hundred thousand
women and children would lose vital nutrition assistance. Loan guarantees for small businesses would be
cut by up to $902 million.

Illinois
will lose approximately $33.4 million in funding for primary and secondary
education, putting around 460 teacher and aide jobs at risk. In addition, about 39,000 fewer students would
be served and approximately 120 fewer schools would receive funding.

Illinois
will lose about $1.4 million in funding for job search assistance, referral,
and placement, meaning around 50,780 fewer people will get the help and skills
they need to find employment.

Congress
must replace these arbitrary and across-the-board cuts before they cause serious
harm to the middle class and to our economy.

Make
no mistake: We must get our fiscal house in order. The President is committed to reducing the
deficit so we don’t pass on crushing debt to future generations. And he has put forward a balanced, responsible
plan for getting this done.

We
should remember that we have already made important progress on deficit
reduction. Despite how gridlocked
Washington appears, Democrats and Republicans have come together and cut the
deficit by $2.5 trillion over the past two years. This has been done through a mix of spending
cuts and revenue increases. In fact,
when you take into account savings on interest payments, the deficit reductions
we’ve already achieved reflect a ratio of spending cuts to revenue increases of
3 to 1. In other words, for every dollar
raised through revenue increases, we have cut spending and interest payments by
three dollars.

All
together, the deficit reduction we have already locked in is more than half the
$4 trillion target that economists generally believe is necessary to stabilize
our finances by the end of the decade.
To finish the job, we would combine sensible changes to entitlement
programs with tax reform that gets rid of loopholes and deductions.

Now,
we know that the aging population and the upward trajectory in health care
costs make Medicare the biggest driver of our long-term debt. That’s why the President has put specific
proposals on the table to reform Medicare.
He wants to reduce subsidies to prescription drug companies while asking
more from the wealthiest retirees. And he wants to reduce Medicare’s bills
by focusing on quality of care rather than quantity of services provided. The President is ready to reform Medicare as
long as the program continues to protect seniors who count on it to survive.

As
the President said, “Our government shouldn’t make promises we cannot keep—but
we must keep the promises we’ve already made.”

To
shrink the deficit even further, we have proposed tax reforms to eliminate
scores of loopholes and deductions. We
want to limit tax breaks that allow billionaires to pay lower rates than
hard-working families. We also want to
reform the business tax code so that we can lower tax rates while creating
incentives for companies to bring jobs back to the United States.

So
the President has a comprehensive plan to get our deficits under control in a
balanced way—with
spending cuts and revenue, and with everybody doing their fair share. And he
remains committed to working with Congress to get this done.

But
as important as it is to restore fiscal sustainability, it cannot be our only
priority. Deficit reduction alone
doesn’t amount to an economic strategy.
The unemployment rate is still too high.
Economic growth needs to be accelerated.

In
his State of the Union address, the President outlined his plan for a stronger,
more competitive economy. It’s a plan
that boosts American manufacturing, supports entrepreneurs, expands domestic
energy production, spurs trade, and brings jobs to our shores. This is a plan that will not only help
strengthen the middle class, it is fully paid for. That is, when combined with the President’s
strategy for balanced deficit reduction, none of these proposals will add a
dime to the deficit.

Now,
here’s how President Obama’s plan for a stronger economy works.

First,
we want to make America a magnet for new jobs and manufacturing. After shedding jobs for more than 10 years,
manufacturers are once again opening up operations in the United States and
creating jobs here at home.

To
accelerate this trend, we should fix our aging infrastructure—our roads,
bridges, ports and pipelines—so companies can get supplies and move goods more
efficiently.

This
morning, I saw firsthand the importance of infrastructure to businesses and
economic growth when I visited the UPS consolidation hub southwest of the
city. For UPS and for so many other
businesses, smooth roads, modern rail links, and reliable airports are
critical—and they affect companies’ ability to grow and create jobs. UPS estimates that for every five-minute
daily delay that UPS trucks spend stuck in traffic, it costs the company $105
million a year. That’s money lost in
wasted fuel and lower productivity—money that could be used to invest, expand,
and hire more workers.

If
we want to compete in the global economy, we can’t settle for deteriorating airports,
deteriorating tunnels, deteriorating roads, and deteriorating bridges. The Mayor understands this. That’s why his administration has been busy
rehabilitating the city’s infrastructure.
By making these investments, you’re making Chicago more appealing to
businesses and improving the quality of life for residents. Look at the Wells Street Bridge over the
Chicago River. Like so many other
bridges in the country, this bridge was in need of repair. And the good news is, work is underway to
reconstruct this vital bridge.

Now,
to get more of these needed upgrades started throughout the country, the
President wants to create a “Fix-It-First” program. This program would put construction workers
on the job as soon as possible to start tackling our most urgent repairs. But there’s no reason the American taxpayer
should shoulder all the costs of these repairs.
So the President would establish a Partnership to Rebuild America program
to attract private capital to help pay for these upgrades.

It’s
true that our economy is stronger when we modernize our roads, bridges, and
airports. It’s equally true that our
economy is stronger when we increase domestic energy production. We’ve made considerable progress over the
last few years to decrease our dependence on foreign energy. And we can make even more progress by
investing in battery technology and wind and solar power; by speeding up new
permits to expand natural gas production; and by creating a new Energy Security
Trust Fund to get our cars and trucks off oil completely. Not only will these moves help make sure the
industries of the future are developed right here at home, they will help lower
energy costs for families and businesses while creating jobs.

Our
plan would also make the Research and Experimentation tax credit
permanent. The R&E tax credit fuels
private investment in research and technology in the United States, and it
helps spark innovations that lead to new industries, new jobs, and new
breakthroughs in production and engineering.
Just about everyone recognizes the power of this tax credit, and we’re
asking Congress to make it permanent once and for all.

If
we’re going to make the United States a magnet for jobs and manufacturing, we
must forge trade deals that are free and fair.
That’s why the Administration is working to open up markets in both Asia
and Europe for America’s businesses.
Negotiations are moving forward on a Trans-Pacific Partnership, which,
when completed, would boost exports and level the playing field in the burgeoning
markets of Asia. At the same time, we
are setting the stage for talks on a comprehensive Transatlantic Trade and
Investment Partnership with the European Union.
The goal of these partnerships is to create high-standard agreements
that will open markets for our businesses and add to the millions of American
jobs that are currently supported by trade with Asia and the EU.

The
second piece of the President’s blueprint to strengthen the economy is to help
Americans acquire the cutting-edge skills that the job market of the 21st
century demands. To do this, the
President wants to make preschool education available to every child across
America. We know that every dollar we
invest in high-quality early education can save more than seven dollars down
the road in higher earnings that yield more revenue and lower government
spending on social services and crime prevention.

We
also want to invest in secondary education so that our students have the
opportunity to build the skills they need for today’s high-growth, high-wage
jobs. Our plan will encourage schools to
create classes that focus on science, technology, engineering, and math so more
students can go on to fill the high-tech jobs that are available now and in the
future. And our plan will reward schools
that partner with colleges and companies to establish programs that prepare
students to enter the workforce.

We’re
seeing that kind of partnership here in Chicago where five new high schools
have teamed up with local colleges and with companies like IBM, Motorola
Solutions, and Microsoft to equip our kids with the skills that businesses are
looking for right now. We know this
works—it’s time to do it in more places and to reach more students.

Finally,
the third piece of the President’s strategy to strengthen our economy is to
reward the hard work of every American.
That means making sure full-time workers aren’t living in poverty. It also means making sure responsible
homeowners aren’t rejected when they try to take advantage of current interest
rates.

For
workers, the President wants to raise the federal minimum wage, in stages, to
$9.00 an hour in 2015, and index it for inflation. This idea, which is supported by businesses
like Costco, would increase the incomes of millions of families, and give
full-time workers a ladder into the middle class. For homeowners, we want to let those who have
never missed a payment on their mortgage refinance at today’s historically low
rates. This would give responsible
homeowners the chance to save $3,000 a year.

Putting
money in the pockets of workers and homeowners will help families pay their
bills. It will also help propel our
economy forward. The fact is, helping
minimum wage workers and responsible homeowners are things leaders of both
political parties have endorsed in the past, and there’s no reason Congress
shouldn’t act on them today.

The proposals I just laid out are part of
President Obama’s approach to growing our economy and strengthening the middle
class. It’s a powerful jobs and growth
plan. And it fits entirely within his
balanced framework for deficit reduction.
It’s important that our leaders in Washington come together to not only
create a path to fiscal responsibility, but also to take these steps today so
that we can have a more prosperous tomorrow.

Before
I close, I just want to point out that when I come home to this great city—I
was born and raised in Evanston—I am reminded of some undeniable truths about
this country. We have the best
universities. We have the best research
facilities. We lead the world in
technological advances and medical innovations.
We attract entrepreneurs from all over the globe. Investors clamor to put their money
here. Our businesses are second to
none. We have the toughest and most
creative workers in human history. And
our economic system is the biggest, strongest, and most resilient in the
world.

There
are, of course, important challenges before us.
But if we make our country a magnet for jobs and manufacturing; if we give
our people the skills they need to do those jobs; if we guarantee that hard
work leads to a decent living; and if we reduce our deficit in a balanced way,
there’s no doubt we will overcome them.

Thank
you.

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